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Today's best stock ideas (Thu, Dec 7)
Connor Van Ooyen
December 07, 2023
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👋 Good Morning!
Welcome to the 136 new readers who joined yesterday!
Our AI read and summarized 67 stock ideas, 947 news articles, and 114 insider trades and found:
$NRP has 400% potential (featured stock idea)
Google released their ChatGPT competitor (news)
The COO at $BALL bought $150k of stock (insider trade)
and much more…
Thanks for reading! Have a great day.
Connor
* If you missed yesterday’s email, don’t forget to read it here
ANNOUNCEMENT
Not really an announcement, but more of a question!
If I created a Discord group for readers of this newsletter, would you be interested in joining? It’d be a place for me to post the extra stock ideas I find each day as well as a place for all of us to talk stocks with each other.
After you vote, please leave a comment telling me why you would or wouldn’t be interested!
Would you join a Discord group for Yellowbrick Road readers? |
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FEATURED STOCK IDEA
BLOG POST
$NRP is reducing debt and increasing distributions
Natural Resource Partners L.P. is a company focused on owning and managing mineral reserve properties, primarily focused on coal and related natural resources. The company earns revenue through leasing assets and collecting royalties.
Ticker: NRP | Price: $80 | Price Target: $400 (+400%) | Timeframe: N/A
🔥 Coal | 📈 Bullish Idea
Natural Resource Partners (NRP) is a deleveraging coal company with two levers for value creation: debt reduction and increased distributions. The company has generated $304 million in FCF over the TTM and reduced its debt obligations by $60 million quarter-over-quarter, bringing the total down to $325 million. NRP is on track to achieve its goal of zero debt within six quarters. This deleveraging will create value for unit holders, as a 10% reduction in debt can lead to a 19% increase in stock price. Additionally, NRP aims to maximize cash flow available to unit holders. Currently, the company pays out only $39 million in distributions, but it could increase this to five times the current level if its FCF falls 33% and it becomes debt-free within 18 months. This potential increase in distributions could lead to a 5x increase in the stock price. NRP is an undervalued company with significant growth potential, and investors should consider it as a 'no-brainer' investment opportunity.
Read the full article here. Read time: 7 min
POLL - FEATURED STOCK IDEA
+3 POINTS - WEEKLY TOURNAMENT
How do you rate the featured stock idea? |
Yesterday’s Rating (link):
Amplitude ($AMPL)
🟩🟩🟩⬜️⬜️ - Buy (57%)
🟥🟥⬜️⬜️⬜️ - Pass (43%)
I accidentally gave the wrong choices in this poll yesterday! Most of the readers who were bearish on the stock were concerned about the huge amount of competition in the space (with even more competitors now that AI companies are entering as well).
* There are more stock ideas later in the email!
MARKET OVERVIEW
Are you short-term bullish or bearish on the market? |
Yesterday’s Poll Results (link): 57% bullish
The Fear v Greed index finally dropped a little bit (down to 63 from 67) with all of the indexes down as well. The news sentiment moved back above positive but is quite low and still below the previous 7-day average. Yellowbrick Road readers got a little more optimistic, jumping from 50% bullish to 57% bullish. sweir*** summed up the bullish stance nicely by saying: “The market has shown recent gains in many large-cap companies, employment is still strong, and gas prices are down.”
STOCK MARKET NEWS
Today’s news is brought to you by The New Money. Discover the world’s biggest ideas, disruptive trends, and the most exciting early-stage companies. Subscribe for free
Google launches its largest and 'most capable' AI model, Gemini - CNBC
U.S. stock futures remain higher after weaker-than-expected private sector jobs report - Market Watch
U.S. productivity surges in the third quarter - Market Watch
McDonald's aims to open nearly 9,000 restaurants, add 100 million loyalty members by 2027 - CNBC
Meta and Microsoft say they will buy AMD's new AI chip as an alternative to Nvidia - CNBC
* If you want all of the day’s most important stock market news, sign up for my free, daily email called Market Mornings.
QUIZ
+3 POINTS - WEEKLY TOURNAMENT
Which company did Steve Jobs work at before founding Apple? |
Yesterday’s Question (link): Which company was originally formed in 1911 as the Computing-Tabulating-Recording Company (CTR)?
Answer: IBM! It kept that name for 13 years as a leader in record-keeping and measuring systems. It changed its name to IBM when it started manufacturing punch-card tabulating systems.
INSIDER TRADES
The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones. Subscribe here
Director at Generation Bio Co. ($GBIO) purchased 342,960 shares at $1.39/share ($478K total) which increased their holdings by 178.8% (link)
SR VP & COO at BALL Corp ($BALL) purchased 4,637 shares at $53.91/share ($250K total) which increased their holdings by 18.4% (link)
10% Owner at Corebridge Financial, Inc. ($CRBG) sold 35,000,000 shares at $20.50/share ($717.50M total) which decreased their holdings by 9.6% (link)
10% Owner at Clearwater Analytics Holdings, Inc. ($CWAN) sold 9,558,680 shares at $19.75/share ($188.78M total) which decreased their holdings by 100.0% (link)
LINKS YOU’LL LOVE
+15 POINTS - WEEKLY TOURNAMENT
Bank lending turns negative for first time since 2011
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SECRET QUESTION
+10 POINTS - WEEKLY TOURNAMENT
If you read this far, reply to this email with your answer to gain points for the weekly tournament. (Or if you’d rather not answer but still want the points, you can just reply and say hi!)
Secret Question: If you would be interested in joining a Yellowbrick Road Discord, do you have any ideas of how I could make it valuable/interesting for you?
BONUS STOCK IDEAS
BLOG POST
Winter is coming …
OKEA is a small E&P (exploration and production) company in Norway with a strategy of mergers and acquisitions, focused on finding value in mid-to-late-life operations on the Norwegian continental shelf. It is listed on the Oslo Stock Exchange, producing about 23 kboepd, with a market cap of $310 million as of the pitch.
Ticker: OKEA.OL | Price: NOK 29.90 | Price Target: N/A | Timeframe: N/A
🛢️ Oil/Gas | 💰 12.3% Dividend | 🇳🇴 Norway | 📈 Bullish Idea
With Europe currently experiencing its most snow coverage since 2010, and forecasts predicting an exceptionally cold winter influenced by El Niño, energy demand is poised to rise. With OPEC+ reducing production and the US aggressively exporting, nations like Norway and Brazil stand to profit by filling the European energy gap, buoyed by Norway's low operational costs, sizeable resources, low emissions, and high industry transparency. Within this context, OKEA ASA, a Norwegian small-cap E&P with a successful M&A strategy, emerges as a prominently undervalued opportunity. OKEA's production is approximately 23 kboepd, with a market cap of $310 million, and boasts a 12.5% dividend yield. The recent market overreaction to an ex-dividend event and postponed acquisition of the Statfjord Field from Equinor has created a lucrative buying opportunity. Although the Statfjord deal's deferral following updated estimates on reserves and cost has led to temporary uncertainties, OKEA seeks to renegotiate a better price. Despite excluding the Statfjord deal from valuation due to uncertainties, OKEA's financials are strong with net debt in the negative and significant free cash flow, resulting in a compelling Price to FCF of 1.65 and a market cap per kboepd well below that of industry peer Petrobras. The contrarian investment thesis thus culminates in a bullish outlook on OKEA, with the company being deeply undervalued amidst a sector ripe for resurgence.
Read the full article here. Read time: 4 min
ANALYST REPORT
[SHORT] Safety Shot Exposed $SHOT
Safety Shot claims to offer a revolutionary alcohol detox drink but has shown multiple red flags indicating potential fraud, deceptive practices, and involvement in lawsuits and historical pump-and-dump schemes.
Ticker: SHOT | Price: $4.08 | Price Target: N/A | Timeframe: N/A
🥤Detox Drink | 📉 Bearish Idea
Safety Shot, trading under the symbol $SHOT, presents itself as an innovator with its alcohol detox drink, but evidence suggests otherwise. Our thorough examination exposes a company mired in controversy and deception. The leadership's connections to the infamous Stratton Oakmont, combined with their personal histories of financial struggles, dubious legal entanglements, and involvement in pump-and-dump schemes, undermine their credibility. Founders Brian John and Richard Miller, alongside associate Miklos Gulyas, showcase patterns of unreliable behavior, including unpaid debts and attempts at fraud. Despite $SHOT's audacious claims that their product can significantly reduce a person's blood alcohol concentration (BAC) within 30 minutes, such statements blatantly contradict the scientifically established facts regarding alcohol metabolism in the human body. We contend that Safety Shot has strategically labeled their beverage as a nutraceutical to evade FDA oversight while marketing unsupported benefits—a tactic that we believe will eventually draw regulatory intervention. The stock's recent uptick is attributed to aggressive promotion, disconnected from actual financial performance. Furthermore, $SHOT's pivot from its original venture as a CBD-based company to the alcohol detox market, coupled with lingering legal disputes and associations with known fraudulent entities like SRM Entertainment, indicate a pattern of erratic decision-making and unfulfilled promises. Our position is short on $SHOT, anticipating a decline in stock value precipitated by the company's propensity for operational inconsistency and ethical lapses, suggesting an inevitable relegation to OTC obscurity. This assessment stems from public filings and is an expression of opinion regarding Safety Shot's precarious status as a legitimate business venture.
Read the full article here. Read time: 20 min
BLOG POST
Auto Partner: A Boring Business with Brilliant Results
Auto Partner is a distributor of spare parts for cars, light commercial vehicles, and motorcycles, operating primarily in Poland. It manages a just-in-time delivery service with a broad product portfolio that includes car system parts, motorcycle accessories, filters, oils, and car chemicals.
Ticker: APR.WA | Price: PLN 28.20 | Price Target: N/A | Timeframe: N/A
🚗 Auto Part Distributor | 🇵🇱 Poland | 📈 Bullish Idea
Polish automotive parts distributor Auto Partner (APR.WA) boasts a €770 million market cap and a track record of impressive growth. Despite being largely under-followed by major analysts, its Q3 2023 earnings reveal strong performance across the board, with revenue up 27% and net profit rising 22%. This growth is driven by strategic expansion, including a new logistics hub for enhanced international reach, a 37% increase in branches since 2018, and impressive 119% growth in average revenue per branch. Additionally, Auto Partner leverages automation, AI, and efficient capital utilization to maintain robust margins and strong cash flow, even amidst rising costs. This commitment to cost management and shareholder value is further emphasized by the company's 0.8x net debt/EBITDA ratio and over 47% ownership by the President and his spouse. Trading at less than 14 times forward earnings, Auto Partner presents a compelling 'boring' business with significant potential for investor returns. The analysis receives a positive rating of 4 out of 5, exceeding expectations.
Read the full article here. Read time: 8 min
+3 POINTS - WEEKLY TOURNAMENT
Which bonus stock idea was the most compelling to you? |
Yesterday’s Poll Results (link):
🟩🟩🟩⬜️⬜️ Cambium Networks ($CMBM) [36%]
🟨🟨⬜️⬜️⬜️ [SHORT] Arbor Realty ($ABR) [35%]
🟥⬜️⬜️⬜️⬜️ Enad Global 7 ($EG7.STO) [29%]
WEEKLY TOURNAMENT
Gain points and earn prizes every week just for voting on the quizzes/polls, replying to this email, and clicking on ads/sponsored links!
🏆 This Week’s Leaderboard
juule**** (149 points)
mkant*** (149 points)
stev**** (149 points)
Scoring
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MY OTHER FREE NEWSLETTERS
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Intentional Dollar (link): Simple thoughts, tools, and questions to help move your money forward → published weekly, for free, from a professional Financial Advisor and CFP® (written by my friend)
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THAT’S ALL FOLKS
+3 POINTS - WEEKLY TOURNAMENT
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Connor (@connorvo on Twitter)
How would you rate today's newsletter?If you vote 1 or 3 stars, please leave a comment with what you didn't like so I can improve it! |
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